The course is taught in the ENGAGE consortium and is therefore designed for a mixed cohort with heterogeneous backgrounds in macroeconomics, public finance, and climate economics. Target participants are PhD candidates and Research Master students from participating universities, e.g. Universität Mannheim, WU Wien, Tilburg University, Toulouse University. The course will be taught online. The course is first taught from 19 October 2026 to 7 December 2026. It covers 3 ECTS, or 75 hours for students, including 22.5 pure contact hours (a time slot 10:30-12:30 counts for 1.5 hours as we start at 45 minutes after full hour and we have a 15 min break. That is there are 15 lecture slots of 2 academic hours.

The course will be taught by Armon Rezai (WU Wien) and Reyer Gerlagh (Tilburg University).

After completing the course, students should be able to:

1. Understand core concepts and theoretical foundations of climate change as a macroeconomic challenge.
   -    Explain why climate change is an intertemporal macroeconomic externality.
   -    Understand the main contributions in the macro-climate literature and recognize the conceptual limitations of models.
   -    Identify the differences between uncertainty and disagreement in research and policy communities and how these affect the validity of model interpretations.
   -    Derive and interpret simple analytical rules for the social cost of carbon.
   -    Understand the structure of analytical Integrated Assessment Models (IAMs) and DICE-style numerical IAMs.
   -    Apply standard methods of dynamic macro models to climate change.
   -    Distinguish between first-best carbon pricing and second-best climate policy under constrained instruments.
   -    Build tractable models by making deliberate choices about model elements like constraints, choice margins, and state variables.
2. Develop technical and computational methods for modeling and simulation.
   -    Program, implement, calibrate, test and simulate simple climate-macro models in Python.
   -    Critically assess the strengths and limitations of quantitative macro-climate models.
3.  Analyze policy questions and their macroeconomic effects.
   -    Translate policy questions—such as emission caps, instrument choice, cross-industry dynamics, revenue recycling, carbon budgets, and temperature caps—into model objects like constraints, wedges, state variables, and equilibrium conditions.
   -    Derive and explain the equilibrium effects of policy interventions.
   -    Understand the role of Hotelling-style scarcity pricing in climate policy.
   -    Assess how public finance, distortionary taxation, revenue recycling, and the marginal cost of public funds influence climate-policy design.
   -    Evaluate the distributional and political-economy implications of carbon pricing, including effects on households, workers, asset owners, public debt, compensation, and policy feasibility.
   -    Design and evaluate climate policies by connecting theoretical models to practical issues like instrument choice, revenue recycling, and cross-industry dynamics.

The lectures combine structured exposition with discussion of student questions. They are also sometimes structured as tutorials and provide computational practice and help students connect analytical model objects to numerical implementation.
For each lecture, we provide a lecture note that describes

-    what students need to read beforehand (typically 2 hours)
-    exercises they need to make and to hand in (typically 2 hours)

The exercises are not assessed, but need to be handed in, and become public information. The lectures begin with a discussion with the lecturer of the exercises from the previous lecture by a student randomly selected.

Course material will be made available via Canvas. For various lectures, there will be lecture noteswith required readings and optional background readings; students should prioritise the required readings. Readings will be listed with DOI/CEPR/working-paper links to facilitate access through each student’s home-institution library. TiU is adamant that we cannot distribute copyrighted material.

Students will be graded on two components:

-    Their submitted course exercises throughout the course. Students will be asked to discuss their submission at the beginning of the next class. 
-    An oral exam, with material discussed at the exam to be prepared by the student. The exam may include real-time coding. The lecturers jointly determine the grade.

Please log in with your WU account to use all functionalities of read!t. For off-campus access to our licensed electronic resources, remember to activate your VPN connection connection. In case you encounter any technical problems or have questions regarding read!t, please feel free to contact the library at readinglists@wu.ac.at.